Shree Minerals Ltd (ASX:SHH) has passed another milestone on the path towards recommencing the Nelson Bay River Iron Project (NBR) in northwest Tasmania by signing a port storage and ship loading agreement.
The agreement with Tasmanian Railway Pty Ltd (TasRail) covers the storage and ship loading of iron ore via a ship loader and warehouse known as the TasRail Bulk Minerals Export Facility (BMEF) at Berth 5 of the Port of Burnie.
This secures the infrastructure for shipping of Direct Shipping Iron Ore (DSO) from NBR and follows Shree’s recent re-permitting progress with an updated draft development proposal and environmental management plan submitted to Tasmania’s Environmental Protection Agency (EPA).
New ship loader planned
As well as the storage and loading deal, the company is also encouraged that TasRail will design and construct a new state of the art ship loader during the term of the agreement.
NBR is in the far northwest of Tasmania within an established mineral province in the region that includes Grange Resources Limited (ASX:GRR)’s (ASX:GRR) Savage River Iron Ore Mine and is about 150 kilometres from Burnie Port.
The Direct Shipping Ore (DSO) project at NBR will be an all-contract mining, processing and haulage operation using local contractors in the region.
It requires no major processing beyond crushing and screening after which the ore is then trucked to the port and shipped.
Restart plans
The project was developed in 2013 with the first shipment of ore leaving the Port of Burnie in January 2014 but was placed on care and maintenance in June 2014 following sharp iron ore price falls.
With the improvement in the iron ore price since mid-2018, the company has been actively working to re-permit the NBR as part of its strategy to recommence the production of the DSO resources from the existing open pit.
To resolve legal issues with the existing permit, Shree applied for a new Tasmanian environmental permit covering the DSO operations.
After public consultation in November 2018, the EPA issued guidelines for the preparation of a Development Proposal & Environment Management Plan (DPEMP).
READ: Shree Minerals makes headway with Nelson Bay River Iron Project re-permitting
Working towards this strategy, the company has completed the requisite technical studies to develop a draft of the DPEMP and last month submitted an updated draft to Tasmania's EPA.
This follows comments received from EPA in June 2021 on the previous draft DPEMP submitted in January 2021.
Shree’s revised plan includes additional studies, including a process systems engineering plan, a design for mining stages and a trigger action response plan for water discharge.
An independent expert review was also carried out on the draft proposal prior to its submission to the EPA.
As a result of the update, Shree hopes it can advance through the EPA assessment process.
The company hopes to be in a position to consider a formal decision for recommencement of the mine, once the environmental permit is granted after completion of the assessment process.
Robust iron ore forecast
Shree's plans come amidst a robust macro environment for iron ore producers with iron ore prices, while volatile, forecast to remain at healthy levels.
Any near-term supply response is expected to be limited, particularly with little latent capacity left at major iron ore exporting ports and railways in Australia.
As iron ore prices remain healthy, there has also been a substantial reduction in discounts for medium-grade iron ore, such as the 58% iron that makes up the company’s DSO product.
In addition, there has been further improvement in premiums for material with lower impurities like low alumina, such as the NBR DSO product, as Chinese authorities continue to emphasise environment control.